Safety Nets in Shocking Times: Lessons from Indonesia's Cash Transfer Program

In 2005 the Indonesian government announced a program of unconditional cash transfers to its poor and near-poor citizens to help them overcome the adverse effects of fuel price hikes caused by a massive reduction in subsidies.  The program—the largest of its kind in the world, covering some 19 million households—was reintroduced in 2008 following another round of fuel subsidy cuts.

How successful was this effort to help poor Indonesians weather these economic shocks?  Did the transfers alleviate suffering to the desired extent?  Did their unconditional character ensure quick action and wide coverage?  Or did it foster dependence on public welfare and depress incentives to work?  Were deserving recipients chosen?  Or did corruption and conflict distort the process?  Are there lessons in Indonesia’s experience applicable to other developing countries?  Dr. Sudarno will mobilize quantitative and qualitative evidence to address these questions.

Sudarno Sumarto co-founded The SMERU Research Institute and served as its director for nearly ten years.  Under his leadership, SMERU played a vanguard role in helping to reduce poverty in Indonesia through careful empirical research on behalf of improved public policy.  His more than fifty publications include studies of economic growth, poverty and unemployment reduction, and the performance of primary-school pupils, among other topics, in the Journal of Development Economics (2009), Beyond Food Production (2007), and SMERU’s own working paper series, among other venues.  He has also been active as an advisor to the Indonesian government on poverty issues and as a lecturer at the Bogor Institute of Agriculture.